EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 12.2, Problem 1.1MQ
To determine
To discuss: On the point that it cannot be a Nash equilibrium if one firm is charging marginal cost and other is charging above the marginal cost.
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Students have asked these similar questions
Consider the Bertrand pricing game from class. If both firms have identical marginal cost of $10 and consumers will purchase from whichever firm is cheapest as long as the price is under $50, what will be the Nash equilibrium?.
a 50, 50
b 50, 10
c 10, 10
d 10, 50
I have constructed a Bertrand game (competition in prices) and presented you with the reaction functions of each firm.
p1 = 12.5 + p2/4
p2 = 5/2 + p1/2
a) Use excel to draw the reaction functions.
b) Solve for the Nash equilibrium
Two firms operating in the same market must decide between charging a high price or a low
price. The Payoffs are as below. Firm A's profit is listed before the comma, B's profit after the
comma.
Firm B
Firm A
Low Price
High Price
Low Price
16, 17
7, 28
High Price
28, 7
22, 22
If each firm tries to choose a price that is optimal, regardless of the other firm's price, what is
the Nash equilibrium? Does either firm have a dominant strategy?
Chapter 12 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 12.2 - Prob. 1TTACh. 12.2 - Prob. 2TTACh. 12.2 - Prob. 1MQCh. 12.2 - Prob. 2MQCh. 12.2 - Prob. 1.1TTACh. 12.2 - Prob. 2.1TTACh. 12.2 - Prob. 1.1MQCh. 12.3 - Prob. 1MQCh. 12.3 - Prob. 2MQCh. 12.3 - Prob. 1TTA
Ch. 12.3 - Prob. 2TTACh. 12.3 - Prob. 1.1MQCh. 12.3 - Prob. 2.1MQCh. 12.3 - Prob. 1.1TTACh. 12.3 - Prob. 2.1TTACh. 12.4 - Prob. 1TTACh. 12.4 - Prob. 2TTACh. 12.5 - Prob. 1MQCh. 12.5 - Prob. 2MQCh. 12.5 - Prob. 1TTACh. 12.5 - Prob. 2TTACh. 12.6 - Prob. 1MQCh. 12.6 - Prob. 2MQCh. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQCh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - Prob. 12.6PCh. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Prob. 12.10P
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